John Locke Update / Research Brief

Nebraska Joins the De-licensing Revolution, while North Carolina Sits

posted on in Economic Growth & Development, Law & Regulation, Rights & Regulation
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It is strange, isn’t it, that a state that may be indirectly responsible for touching off the de-licensing revolution among the states still hasn’t joined that revolution? But that’s where we are in North Carolina.

How could North Carolina be indirectly responsible? Because an anticompetitive practice of its dental licensing board led to a landmark Supreme Court decision that dismantled the antitrust immunity expectation states had with respect to their occupational licensing boards. Ever since, many states have passed significant restructurings of their occupational licensing systems, but North Carolina so far has not.

In North Carolina State Board of Dental Examiners v. FTC, the Supreme Court ruled that a state licensing board may violate federal antitrust law if a controlling number of board members comprise “active market participants” regulated by the board but the board’s actions are not “clearly articulated and affirmatively expressed as state policy” nor is the board “actively supervised by the State.” Boards could therefore no longer expect antitrust immunity, and exactly how the state could demonstrate active supervision over licensing boards is unclear.

There has been a steep rise in occupational licensing midway through last century till now. In the 1950s one in 20 workers needed a license in order to work; now licensing affects nearly 30 percent of the nation’s workforce. But the expanse of licensing has been accompanied by growing societal unease over licensing.

Reforming occupational licensing is a rare issue uniting the political Left and Right, but it nevertheless had been an elusive prospect because of public-choice dynamics. This loss of antitrust immunity appears to have tipped the scales, finally, in favor of reform.

Reform is breaking out all over

Here is how remarkable the change has been. According to a study by the federal Bureau of Labor Statistics, in the 40 years ending in 2015, the year of NC Dental Board, there were only eight successful de-licensing efforts in the 50 states.

Since then, depending on how you choose to count them, there have been nine or ten. Many of these are systematic restructuring, rather than de-licensing a single occupation. Consider this breakdown, pre– and post–NC Dental Board: 

De-licensing before NC Dental Board

1972: Virginia (naturopaths)

1977: Colorado (private investigators)

1979: Wisconsin (watchmakers)

1981: Colorado (funeral directors)

1983: Alabama (barbers; relicensed in 2013)

1983: Minnesota (watchmakers)

1994: Colorado (egg candlers)

2004: Alabama (interior designers)

De-licensing after NC Dental Board

2016: Arizona (4 occupations)

2016: Rhode Island (27 occupations)

2016: Tennessee (systematic restructuring: Right to Earn a Living Act)

2017: Arizona (systematic restructuring: Right to Earn a Living Act)

2017: Nebraska (bank CEOs)

2017: Mississippi (systematic restructuring: Occupational Board Compliance Act)

2017: Connecticut (system streamlining, affecting 4 – 6 occupations)

2017: Illinois (2 occupations, as well as ending the practice of denying licenses for irrelevant conviction records)

2018: Nebraska (animal massage therapy)

2018: Nebraska (systematic restructuring: Occupational License Reform Act)

Note: This does not take into account de-licensing of hair braiders. According to the Institute for Justice, 13 states have de-licensed hair braiders, most of them in 2015 or later: Arizona (2004); Washington (declared exempt, 2005); Georgia (2006); Utah (struck down in federal court) and Virginia (2012); Arkansas, Colorado, Maine, and Texas (2015); and Delaware, Kentucky, Nebraska, and West Virginia (2016).

Nebraska’s systematic restructuring passed this week, and it is of particular interest here, because it encapsulated reforms advocated by the John Locke Foundation for North Carolina. Those include using the least restrictive policy option necessary (licensing only as a last resort), having periodic review of licensing requirements, and using the least burdensome requirements for licenses that are deemed necessary.

Conclusion

From 1967 till 2010, North Carolina policymakers were regulating occupations so quickly, it was as if they were churning out a new occupation license every seven months. This came to an abrupt end in 2011. So the good news is at least the state hasn’t been adding to its already burdensome licensing structure.

But it’s past time for North Carolina, a state that recognizes your inalienable right to the enjoyment of the fruits of your own labor, to join the de-licensing revolution.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. As director of regulatory studies and research editor at the John Locke Foundation, Jon gets in the weeds of all kinds of policy… ...

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